What happened
Shares of Splunk (NASDAQ: SPLK) climbed 12.9% on Thursday, according to data provided by S&P Global Market Intelligence, after the data analytics and observability company announced strong second-quarter results.
So what
For its fiscal second quarter 2024 (ended July 31, 2023), Splunk's quarterly revenue climbed 14% year over year to $910.6 million, translating to a generally accepted accounting principles (GAAP) net loss of $63.2 million, or $0.38 per share. On an adjusted (non-GAAP) basis -- excluding items like stock-based compensation -- Splunk generated net income of $134.8 million, or $0.71 per diluted share. Analysts, on average, were only expecting adjusted earnings of $0.47 per share on revenue of $888.6 million.
Splunk also saw significant growth in total annual recurring revenue (ARR; up 16% year over year to $3.858 billion) thanks to its momentum with large customers. The company ended the quarter with 834 clients with ARR greater than $1 million, up from 723 in the same year-ago period.
Finally, Splunk is beginning to enjoy the fruits of operating leverage and increased cash flows at scale. Trailing-12-month free cash flow nearly quadrupled (up 273% year over year) to $805 million.
Splunk CEO Gary Steele highlighted the company's status as a key beneficiary among the rise of artificial intelligence stocks, adding: "Through our ongoing focus on accelerating innovation and harnessing AI, we unveiled many important advancements during the quarter to help customers strengthen their overall digital resilience and security posture."
Now what
Splunk raised its full fiscal year 2024 guidance as well, calling for total ARR of between $4.15 billion and $4.175 billion (an increase of $25 million from the lower end of its old range), total revenue of between $3.925 billion and $3.95 billion (up from $3.90 billion), and free cash flow of between $855 million and $875 million (up $50 million from both ends of its previous guidance range).
In the end, this was a solid beat-and-raise performance from Splunk. The stock is understandably rallying in response.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Splunk. The Motley Fool has a disclosure policy.
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